You could borrow $2,000 today from Bank A and repay the loan,with interest,by paying Bank A $2,154 one year from today.Or,you could borrow X dollars today from Bank B and repay the loan,with interest,by paying Bank B $2,477.10 one year from today.In order for the same interest rate to apply to the two loans,X =
A)$2,300.00.
B)$2,450.00.
C)$2,500.00.
D)$2,525.50.

Question

Quizplus · Accepted Answer

The interest rate is the same for both loans, so the ratio of the loan amounts must be the same as the ratio of the repayment amounts. Therefore, X / 2,000 = 2,477.10 / 2,154. Solving for X, we get X = 2,300.00.

You Could Borrow $2,000 Today from Bank a and Repay